Union Budget 2016 and Automobile Industry, Budget 2016 Highlights Automobile Sector, Automobile Industry in India budget 2016:
Recently announced budget 2016 by Finance Minister Mr. Arun Jaitley has really affected the automobile industry badly. The real issues and demands of car manufacturers are not been addressed. The industry has demanded reduction on excise duty but it nowhere seems to be discussed in budget. On contrary 1% infra cess on Petrol, LPG and CNG cars and SUV’s has been added which will consequently affect the price and demand as well. According to home-grown company Mahindra & Mahindra 1% “Tax collection at source” on luxury cars having prices above 10 lakhs could impact the ease of doing business. The dealer has to collect the tax on ex-showroom price and pay it to the government.
It seems like government has not announced anything which would be favoring the contributing positively to the manufacturing sector and overall economy. The customer will now be paying some additional upfront for purchasing its dream car since it has become costlier due to some additional taxes on prices. The increment in expenditure on infrastructural development is the one positive and pleasing announcement which gave a sigh of little relief. Specifically the approval of 10000 km national highways and a total investment of 97000 Cr. in road sector would help people in getting better road infrastructure. FM has also announced that farmers and notified class of persons will be having an option of submitting a form by which TCS will not be charged. Due to this there may be increased rural demands. Also the exemptions will continue on environment friendly vehicles.
The unlimited extension in exemption granted to the goods used in the manufacturing of electrically operated vehicles and also the hybrid vehicles is expected to help in improving the consumer sentiments and promoting the faster adoption of these vehicle. On contrary once the cess is effective there will be an increment at entry level in the prices of Hyundai Eon by Rs.3000. Also the prices of its popular models Grandi10 and Elite i20 will go up by 5000 and 18000 respectively. There will be additional 2.5 % taxes on sub 4 meters diesel cars with engines less than 1500 cc. Another layer of taxes doesn’t help the already complicated tax structure in the manufacturing sector.
Overall it’s not the budget the automobile industry was anticipating for, so it’s another challenging year for the auto industry.
